IKEA Case Study

IKEA: 21,2 bilions euro in 2008 from 4,4 bilions in 1994 ; 10%
profit margin
Owner: Ingvar Kamprad(Sweden)
Designer: Gillis Lundgren
Initial situation: expensive furniture, fragmented industry,
small retailers
Goal: stylish functional designs, cheap prices
Concept: democratic design
Key Features: self assembly, cutting retailers out of equation
Pressions from retailers- 2 consequences(positive reaction
to external pressure) : 1. Design new products in house 2. A new
manufacturer out of Sweden Poland (cheap/ vodka)
3 advantages to work with IKEA (polish perspective): 1.
One mans decision 2. Long term contract 3. New technology
IKEA stores- from mail order
Quality fight (the swedish magazine story made IKEA
acceptable to middle class householders)
 International expansion (Jan Aulino)

Immediate availability
Capital problem: make quick profit and get positive cash
flow; young team; mistakes
US- a challenge of entirely different nature : locate on the
coast based on the clients profiles(people who had traveled
abroad, risk takers, liked fine food and vine)
Big problems: size, prices, measurements, etc; a total
change combined with the new thirst for elegance and
quality(Starbucks, Apple, IKEA)
New advertisements for younger demographics; new
commercial : Unboring
In China adapt the location (car ownership not very
widespread): close to public transportation, delivery
services, deep price discounting (local suppliers)
 IKEA concept and business model

Target market: young, mobile, global middle class

Low price attractively designed furniture
Good advertisements
Design of the stores; interior related to the impulse to
purchase as costumer wander through IKEA; restaurants,
child care facilities, access to major roads, self service pick up
solution(response to long lines)
Product strategy council- priorities for IKEA product- the
price tag first, the product
Identify appropriate suppliers and least costly materials
Contracts out manufacturing; low cost, high quality BUT long
term relation, high volume business, advise the partner in
management, technology, etc
Modern technology
 IKEA Organization and Management

IKEA reflects the personal philosophy of its founder

Frugality
Mission driven: a cause to make life better for the
masses, to democratize furniture
Informal, nonhierarchical , team based, egalitarian
culture, creativity, younger people who had not
worked for other enterprises
love, family
private not public company